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Ibrahim Sameer (MBA - Specialized in Finance, B.Com – Specialized in Accounting & Marketing)
THE DEVELOPMENT OF MARKETING
It would be a mistake to think that marketing is a
phenomenon of the 20th century. Its origin can be
traced back to early civilisation. When communities
began to specialise they produced surpluses in certain
products which they then sought to exchange with
other communities.
THE DEVELOPMENT OF MARKETING
The Industrial Revolution
Prior to the 17th century and the start of the Industrial
Revolution, producers and merchants tended to
operate on a small scale, concentrating their
operations in very localised markets.
THE DEVELOPMENT OF MARKETING
The Industrial Revolution (cont…)
However the Industrial Revolution brought with it
advances in technology and production techniques
which meant new processes, greater output and a
transformation of the British economy away from its
dependence on agriculture to one of industrial
production.
THE DEVELOPMENT OF MARKETING
The 20th Century
Improvements in technology and production
processes meant that the 20th century witnessed a
transition from a production society to a consumption
society.
THE DEVELOPMENT OF MARKETING
The 20th Century (cont…)
Service industries such as banking and hospitality grew
substantially in the latter half of the century. Increasing
competition, not simply local or regional but national and
international, meant that the problem became no longer
one of supply but of anticipating demand.
THE DEVELOPMENT OF MARKETING
The 20th Century (cont…)
Towards the end of the 20th century the invention of
the internet had a major impact on businesses and the
way customers purchased products. Customers had
wider access to products and services,
THE DEVELOPMENT OF MARKETING
Today
All kinds of industries are now engaged in an intense
struggle to establish customer preference in favour of
their products over those of the competition.
THE DEVELOPMENT OF MARKETING
Today (cont…)
Rather than wait for orders tocome to them, the
industry must go out and manage demand for its
products by winning customers and also, importantly,
retaining customers by building customer loyalty.
THE DEVELOPMENT OF MARKETING
Today (cont…)
For many, this process was the start of the marketing
era and out of it many modern marketing practices
were born. Advertising appeared as a means of
stimulating sales.
THE DEVELOPMENT OF MARKETING
Today (cont…)
Brandingand packaging were developed as a way of
saying something about the quality of the product.
THE DEVELOPMENT OF MARKETING
Today (cont…)
Sales forces were introduced rather than relying
solely on the merchants to find and develop new
markets for their products, while products themselves
were developed to better satisfy customer needs.
WHAT IS MARKETING? "Marketing is a human activity directed at satisfying
needs and wants."
WHAT IS MARKETING? "The management process responsible for identifying,
anticipating and satisfying customer requirements
profitably."
THE STRATEGIC ORIENTATION OF BUSINESS
The different approaches to markets are referred to as
Strategic Business Concepts or Strategic Business
Orientation. There are only really four different types as
outlined below:
1. Production concept (or production orientation)
2. Product concept (or product orientation)
3. Sales concept (or sales orientation)
4. Marketing concept (or marketing orientation).
Production Concept A company following the production concept is
operating on the idea that the more you can produce
the more you can sell. Managers assume that
customers are only interested in the availability of
products and low prices and that marketing is not
necessary. This may or may not be true.
Production Concept
In the nineteenth and early twentieth centuries, the
primary purpose of all business and industrial activity
was thought to be production. Manufacturers were
in a “supplier’s market” and were faced with a virtually
insatiable demand for anything that could be
produced.
Production Concept
Henry Ford made a famous statement when he
produced his first production line Model “T” Ford:
“You can have any colour you like, as long as it is
black.”
Production Concept
This was certainly a production orientated statement
and during this period firms concentrated on
improving production efficiency in an attempt to
bring down costs.
Production Concept
In America, in the economic recession of the 1920s and
1930s, to simply produce was no longer good enough
and firms had to begin to focus their attention on the
changing needs of the market place.
Production Concept
This ultimately led to the idea of marketing
orientation and it was America in the 1930s that saw
the origin of this common-sense philosophy.
Production Concept
Advantages of production orientation:
economies of scale
reduced marketing and production costs
greater market share
Production Concept
Disadvantages of Production orientation:
any degree of exclusive appeal
close contact with customer needs
high levels of customer loyalty.
Product Concept
Product orientation is present when managers in the
company believe that customers will recognise a
good product or service and buy it when it is made
available.
Product Concept
Perhaps one of the most quoted examples of this type
of orientation concerns the Sinclair CV5, a small
motorised vehicle which was introduced into the UK
by Clive Sinclair. Sinclair thought he had an excellent
product which would help alleviate pollution and
lower traffic levels on the roads of Britain.
Product Concept
He did carry out product tests –but they were in a
gymnasium. When the product was finally launched
it proved to be dangerous and frightening when users
were faced with large trucks and other vehicles using
the public roads.
Product Concept
Sinclair had underestimated the fact that his target
audience liked their cars and that they were not going
to buy something which, in their opinion, was inferior
to what they already had. Despite his belief in it, the
product failed completely.
Product Concept Companies following a product orientation can only be
successful if:
there is a potential demand for the product
products are given full marketing support
products meet customer requirements.
Product Concept Thus it is obvious that product orientation MUST, if it
is to be successful, be adopted only after research has
been carried out.
Sales Concept
Gradually business people began to appreciate that in
a highly competitive environment it was simply not
enough to produce goods as efficiently as possible. The
sales department was thought to hold the key to
the firm’s prosperity and survival, and sales volume
became the success criterion.
Sales Concept
In a sales-orientated firm, selling is a major
management function, and is often given status
equal with that of production and finance. Here the
emphasis is on “pushing” a company’s products or
services to sometimes unwilling customers.
Sales Concept The sales concept only works when:
there is little need for an after-sales service
companies are not interested in forming relationships
with customers
buyers have low expectations of the product or service
repeat purchasing is unlikely.
Marketing Concept Under the marketing concept it is the customer who
becomes the centre of business attention. Firms no
longer see production or sales as the key to prosperity,
growth and survival, but the identification and
satisfaction of customers’ needs and wants.
Marketing Concept In a marketing-orientated organisation, the whole
firm appreciates the central importance of the
customer and realises that without satisfied
customers there will be no business.
Marketing Concept The Chartered Institute of Marketing sums up what
marketing is in its formal definition of the subject:
“Marketing is the management process
responsible for identifying, anticipating and
satisfying customer requirements profitably.”
Marketing Concept An alternative definition is put forward by the
American Marketing Association:
“Marketing is the process of planning and
executing the conception, pricing, promotion and
distribution of ideas, goods and services to create
exchanges that satisfy individual and
organisational objectives.”
Marketing Concept
The Chartered Institute of Marketing definition,
perhaps more succinctly (briefly) sums up the overall
aim of marketing, but it is felt that the American
Marketing Association’s definition is more precise as it
identifies the tools with which marketing realises its
objectives.
Marketing Concept
These tools are collectively known as the “marketing
mix” - a term coined by Neil Borden and essentially
this means manipulating the “four Ps” (a term coined
by E Jerome McCarthy and which embraces price,
product, place and promotion) in their most effective
way.
Marketing Concept
It is really only since the end of the Second World War
that marketing has developed in the United Kingdom
as a formalised business concept with a codified
philosophy and a set of techniques.
Marketing Concept
It has also been demonstrated that marketing is now
central to planning in businesses that operate in a
competitive environment. The marketing-orientated
firm achieves its business objectives by identifying
and anticipating the changing needs and wants of
specifically defined target markets.
Marketing Concept
Business planning, therefore, starts with
customers, and it is the responsibility of marketing to
marshal these requirements through the marketing
plan into the corporate business plan.
Marketing Concept
As a consequence, it is from customers’ needs and
subsequent marketing planning to meet these needs,
that other functions in a business operation take their
respective leads.
DEVELOPING A MARKETING ORIENTATION
Marketing as an organisational philosophy and activity
is applicable to almost all types of organisation,
whether profit-making or not-for-profit.
DEVELOPING A MARKETING ORIENTATION
When properly understood, it will be appreciated that
marketing is not necessarily narrowly confined to a
particular office or department, and indeed one of the
most frequent problems that companies have is in the
belief of other departments (and sometimes even the
marketing department itself) that somebody ‘does’
marketing in the process sense.
DEVELOPING A MARKETING ORIENTATION
In its widest sense, marketing is really an attitude of
mind or an approach to business problems that should
be adopted by the whole organisation.
DEVELOPING A MARKETING ORIENTATION
It is only when the discipline is understood in this
wider context that the student and practitioner alike
can properly appreciate the role of marketing and
its value to an organisation.
DEVELOPING A MARKETING ORIENTATION
The importance of the consumer:
As far back as 1776, during the Industrial Revolution,
Adam Smith, widely regarded to be the founding
father of modern economics, wrote the following in his
classic work The Wealth of Nations:
DEVELOPING A MARKETING ORIENTATION
“Consumption is the sole end and purpose of all
production and the interests of the producer ought to
be attended to only so far as it may be necessary for
promoting that of the consumer.”
DEVELOPING A MARKETING ORIENTATION
In essence, it does not matter how good a firm may
think its product to be, or how well organised it is in
processing its orders, unless it has customers there
is no business to conduct.
DEVELOPING A MARKETING ORIENTATION
In the statement above, Adam Smith has given the
essence of the central guiding theme of the subject of
marketing. The key word is consumer, as it is the
identification and satisfaction of consumer
requirements that forms the basis of the modern
concept of marketing.
DEVELOPING A MARKETING ORIENTATION
Interestingly, Smith went on to say: “The maxim is so
perfectly self-evident that it would be absurd (silly) to
attempt to prove it. But in the mercantile system, the
interest of the consumer is almost constantly sacrificed
to that of producers who seem to consider production,
and not consumption, as the ultimate end and object
of all industry and commerce.”
DEVELOPING A MARKETING ORIENTATION
Some people view the subject of marketing as a
branch of applied economics. Other writers and
practitioners have worked for a number of years in a
specialised field of marketing such as advertising,
brand management or marketing research.
DEVELOPING A MARKETING ORIENTATION
It is understandable that such people often regard
their particular speciality as the most important facet
(feature) of marketing.
DEVELOPING A MARKETING ORIENTATION
Some people take a rather myopic (narrow minded)
view of the subject and see marketing merely as a
collection of well-developed management
techniques, which, when combined, constitute a
functional area of the organisation’s management
operation.
DEVELOPING A MARKETING ORIENTATION
More enlightened practitioners and theorists view
the subject as an overriding business philosophy
which guides the organisation in everything it
does. Marketing is often viewed as:
DEVELOPING A MARKETING ORIENTATION
A social process: At a macro level, marketing is
viewed as a social process by which individuals and
groups obtain what they need and want by creating
and exchanging things of value.
DEVELOPING A MARKETING ORIENTATION
A distributive system: Marketing is viewed as a
process whereby in a democratic society, operating
within a free market or mixed economy there evolves
a system of distribution that facilitates transactions
resulting in exchange and consumption.
DEVELOPING A MARKETING ORIENTATION
A targeting or allocative system: Marketing is
perceived as the way any organisation or individual
matches its own capabilities to the needs and
wants of its customers.
DEVELOPING A MARKETING ORIENTATION
From an organisational point of view, marketing is
seen as the primary management function that
organises and targets the activities of the entire
organisation in order to convert consumer purchasing
power into effective demand.
DEVELOPING A MARKETING ORIENTATION
Its objective is to move the product or service to the
final consumer or user in order to achieve company
profit (or optimum cost efficiency).
DEVELOPING A MARKETING ORIENTATION
A functional area of management: Marketing is
seen as a functional area of management, usually
based in a particular location within the organisation,
which uses a collection of techniques, e.g. advertising,
public relations, sales promotion and packaging, to
achieve specific objectives.
DEVELOPING A MARKETING ORIENTATION
An overall business philosophy: Many successful
firms see marketing as the keystone of their business.
Marketing in such firms is viewed not as a
separate function, but rather as a profit-
orientated approach to business that permeates not
just the marketing department but the entire business.
DEVELOPING A MARKETING ORIENTATION
The central mission of the entire organisation is
seen as the satisfaction of customer requirements
at a profit (or, in not-for-profit sectors, at a maximum
level of efficiency or minimum level of cost).
DEVELOPING A MARKETING ORIENTATION
This is achieved by focusing the attention of the
entire organisation on the importance of the
customer and the needs of the market place.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Organization comprise of different department /
sections and units. A typical company may have
following departments:
Finance departments
HR departments
Production department
Marketing departments
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Finance departments
The Finance Department is responsible for managing
the corporate finances and budget.
The finance department will monitor the
expenditure and revenue of other departments and
manage the cash flow for the organization.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
HR departments
The Human Resource Department is responsible for
managing the staff within an organization.
Activities will involve the recruitment and appraisal
of staff and defining the skills set necessary to achieve
corporate objectives.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Production departments
The Production Department is responsible for
manufacturing the product.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Production departments (cont…)
Production may involve sourcing raw materials,
developing the detailed product specification,
employing staff with the correct skills to make the
product and sometimes the warehousing and
packaging of the product.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Marketing departments
The Marketing Department is responsible for
identifying customer needs, analyzing competitor
products and should liaise with the production
department to ensure its products have the right
features, are of the right quality and will meet
customer expectations.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Finance department vs. Marketing department
Marketing and the Finance Department should work
together in preparing financial plans for the
organization.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Finance department vs. Marketing department
The marketing department can assist the Finance
Department in its preparation of forecasts by providing
market information, via research and market
intelligence on predicted market size, market share,
competitor activity and expected customer revenues.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Finance department vs. Marketing department
The Finance Department is responsible for ensuring
costs and profits are in line with forecasts/budgets.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Finance department vs. Marketing department
An example of a conflict would be when revenues are lower than
budget; the finance department may wish the marketing
department to cut its costs to ensure that profit margins remain
consistent with the forecast, however the marketing department
may wish to actually spend more money (in advance of revenues)
on promotion to try to increase sales revenue.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
HR department vs. Marketing department
Marketing and the HR Department should work
together to ensure that the organization recruits and
trains its staff with the skills & competencies
needed to compete effectively in the current and
future market/s.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
HR department vs. Marketing department
It is also important that all staff within the organization are
kept up to date with new product development;
therefore marketing should work with the human resource
department to ensure that staff are kept fully informed of
any changes via the use of internal marketing techniques.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
HR department vs. Marketing department
Marketing will need to influence the continued development
and skills of its organizations staff to ensure these meet
customer needs, for example customer service levels, therefore
conflict may arise between the two departments who may have
varying objectives and priorities for staff training, for example
the human resource department may feel it is a higher priority to
offer health and safety training.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Product department vs. Marketing department
Marketing and the Production Department must work
together to ensure that the products it produces
meet customer needs.
An example of a conflict between the marketing and
production department would be cost versus quality.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Product department vs. Marketing department
The production department will need to ensure
products are produced to the budget allocated, when
the cost of raw materials rise then they may look to
make cost savings by cutting the quality of materials or
features of the product.
COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS
Product department vs. Marketing department
However, the marketing department will be anxious to
ensure that the product quality remains consistent
with customer expectations as well as exceeding
that of competitors.
Recent Marketing Developments “Green Marketing”
We hear the term “green” being applied in a number of
situations these days. There are “green” political
parties both in the UK and elsewhere in the world for
example Germany. Recycling of otherwise waste
materials is another manifestation of what has come to
be referred to as “green” consciousnesses.
Recent Marketing Developments “Green Marketing”
Firms too have become more “green” in their business
methods, particularly production and other
operational methods. They have also become more
“green” in terms of the packaging used on their
products, and of course in terms of the products and
services themselves.
Recent Marketing Developments “Green Marketing”
A firm that perhaps epitomises (represent) the “green”
marketing firm is the “Body Shop” which offers a
range of environmentally friendly, not tested on
animals, ethically, non exploitatively produced
cosmetic and related products.
Recent Marketing Developments “Green Marketing”
A marketing firm that is a good example of a “green”
firm in the service sector is the Co-operative Bank,
which prides itself on only investing and lending to
ethically run enterprises. For example, it will not
lend to any firm that exploits cheap labour overseas or
pollutes the environment or tests products on animals.
Recent Marketing Developments “Green Marketing”
Green marketing as a pro-active policy
If you look at the labelling of many everyday packaged
grocery products the next time you are in the
supermarket you will see some form of “green”
message on most of them.
Recent Marketing Developments “Green Marketing”
Many firms are now adopting a “proactive” rather than
reactive “green” marketing strategy in an attempt to
gain a competitive business environment.
Recent Marketing Developments “Green Marketing”
Marketing is all about the enterprise meeting the
needs and delivering the want of specifically
defined target markets more effectively and
efficiently than the competition.
Recent Marketing Developments “Green Marketing”
If the market wants, and is prepared to pay for,
“green” products and services then marketing-
orientated firms are duty bound to find ways of
offering such goods and services to their customers.
Recent Marketing Developments “Green Marketing”
They simply would not be doing their job if they did
not, and if they do not satisfy customers it will only be
a matter of time before those customers find another
marketing-orientated firm that does. So-called “green”
issues are no longer simply side issues and only
practised by a few firms, such as “Body Shop”.
Recent Marketing Developments “Green Marketing”
Today “green” issues often have a key position in the
long-term corporate policy of many firms. Firms
are seeking advice from a whole raft (range) of
“environmental consultants” who claim to offer such
firms professional advice on all areas of environmental
and “green” issues.
Recent Marketing Developments “Green Marketing”
In fact offering advice on “green” issues is today
one of the growth areas of the business
consultancy world. Most marketing courses taught at
colleges and universities today usually have a “green”
marketing component to them.
Recent Marketing Developments “Green Marketing”
At the postgraduate level at the major business
schools, “green” issues are given full module status
and they are so important, that they are often woven
into all aspect of marketing and business teaching.
Recent Marketing Developments “Green Marketing”
There has been an enormous increase in marketing
firms trying to obtain good ‘green’ credentials over the
last 20 years or so. This trend is likely to increase over
the next ten years as consumers and governments
become more and more concerned with
environmental and ethical issues.
Recent Marketing Developments “Green Marketing”
Social commentators question the ethics of marketing
and its place in our social system. In a world of finite
resources, they query whether we might be devoting
too much to the gratification (fulfillment) of
materialistic wants to the detriment of the social good.
Recent Marketing Developments “Green Marketing”
It is suggested that marketing creates artificial wants
and the resources channelled into competitive
advertising, branding and packaging are a waste
of money and might be better employed
elsewhere.
Recent Marketing Developments “Green Marketing”
It is, however, acknowledged that marketing is not
merely a business practice, but a social influence that
can be used to improve the quality of life in its
widest sense. This influence should not be
patronising; rather it should be exercised in co-
operation with the individuals and groups who are
consumers of marketing’s offerings.
Recent Marketing Developments “Green Marketing”
Linked to the idea of marketing as a beneficial social
force, is the extension of functional marketing into
non-commercial activities. The pursuit of customer
satisfaction is a valid aim irrespective of the profit
motive.
Recent Marketing Developments “Green Marketing”
Marketing as a discipline is appropriate to the not-for-
profit sector, because its practice obliges managers to
think and act efficiently with end user needs in
mind. Marketing is a style and philosophy of
management that is not restricted to business. It also
has social consequences.
Recent Marketing Developments “Green Marketing”
Implicit in true marketing-orientation is recognition
that business responsibility extends beyond a
company’s immediate customers. Truly marketing
orientated firms will realise this fact and will give their
customers what they want.
Recent Marketing Developments “Green Marketing”
If society want their commercial organisations to
be more environmentally engaged and socially
responsible then firms must do this. They should
be doing this anyway.
Recent Marketing Developments “Green Marketing”
There have been many business ‘scandals’ of late and it
is now even more pressing for firms to demonstrate
their social, environmental and ethical stance.
Past Paper Review December 2007 / Q7
(a) Describe and contrast the following three types of business orientation:
(i) production orientation
(ii) sales orientation
(iii) marketing orientation
Use specific examples to illustrate the points made. (13 marks)
(b) Discuss the importance of recent marketing developments which focus on
environmental, ecological and related issues. (12 marks) (Total 25 marks)
Past Paper Review June 2010 / Q7
(a) Using examples to illustrate your answer, describe and contrast the
following three types of business orientation:
(i) Production orientation
(ii) Sales orientation
(iii) Marketing orientation (13 marks)
(b) Discuss the recent developments which have become known collectively as
‘green marketing’ (i.e. sympathetic to environmental, ecological and related
issues) and the likely effect of such issues on marketing firms over the next 10
years. (12 marks) (Total 25 marks)
Past Paper Review
Answer
(a) Refer Slides 15 – 42
(b) Refer Slides 82 - 102
Past Paper Review
December 2008 / Q7
Discuss the recent developments which collectively
have become known as ‘green marketing’(i.e.
marketing sympathetic to environmental, ecological
and related issues) and explain the likely importance
of such issues to organisations involved in marketing
over the next decade. (25 marks)
Past Paper Review
Answer
Refer slides 82 - 102
Past Paper Review
December 2009 / Q3
(a) Define the term ‘marketing orientation’. (5 marks)
(b) Discuss the view that achieving marketing
orientation within the firm necessitates thinking of
marketing as an overall business philosophy. (20
marks) (Total 25 marks)
Past Paper Review
November 2011 / Q1
(a) Define the term ‘marketing orientation’. (5 marks)
(b) Discuss the view that achieving marketing
orientation within the firm necessitates thinking of
marketing as an overall business philosophy. (20
marks) (Total 25 marks)
Past Paper Review
Answer
(a) Refer Slides 33 – 42
(b) Refer Slides 43 -65
Q & A
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